Note: This is post #100 in a weekly video series on basic economics.
Unemployment is generally harmful to both the economy and to the individual. But there is one type of unemployment that is (mostly) benign, and can even be beneficial: frictional unemployment.
In this video by Marginal Revolution University, Alex Tabarrok explains why frictional unemployment helps allocate human capital (i.e. workers) to its highest valued use. Even when it’s caused by an event such as a firm going out of business, says Tabarrok, frictional unemployment is a normal part of a healthy, growing economy.
(If you find the pace of the videos too slow, I’d recommend watching them at 1.5 to 2 times the speed. You can adjust the speed at which the video plays by clicking on “Settings” (the gear symbol) and changing “Speed” from normal to 1.25, 1.5 or 2.)
Click here to see other videos in the Introduction to Economics series.
